ABSTRACT
The decisions firms make in their international expansion processes are subject to extended research rooted in very diverse theoretical approaches. The starting point of this chapter is the internationalization decisions of firms that are dependent upon previous decisions (Aharoni, 1966). Every expansion is seen as a step for further international expansions (see for instance, Kogut, 1983; Wernerfelt, 1984). Firms gather experiences with every step and add to their knowledge base or absorptive capacity. Firms with an increasing absorptive capacity are more prone to recognize and internalize new learning possibilities (Cohen and Levinthal, 1990). Experiential learning is the driving force of the internationalization process according to the evolutionary approach (or Uppsala model) of internationalization (Johanson and Vahlne, 1977; Johanson and Wiedersheim-Paul, 1975; Welch and Luostarinen, 1988). Gathering market knowledge reduces uncertainty and allows the firm to gradually enter an increasing number of foreign countries, using entry modes that are characterized by augmenting resource commitments, at an increasing psychic distance to their home country (Johanson and Vahlne, 1977). With respect to growing resource commitment four stages were distinguished called the 'establishment chain', along which the firm expands in local markets (Johanson and Wiedersheim-Paul, 1975). It has been questioned later, however, whether the steps proposed by the establishment chain are still valid in the current globalizing world (Hedlund and Kverneland, 1983; Nordstrom, 1991; Turnbull, 1987). Welch and Luostarinen (1988) made a contribution to the evolutionary approach by introducing a framework with six dimensions along which the internationalizing firm is expected to develop. This framework is used as a starting point for this chapter. Its goal is to investigate the patterns Dutch firms have used to enter the newly
opened markets of Central and Eastern Europe (CEE). The aim of the chapter is to contribute to the knowledge of the internationalization process of firms within host countries. Sequential steps taken by Dutch firms in the CEE region are investigated and a test for the establishment chain in the context of modern time in a new market is presented (Bridgewater, 1999).
